Five Things You Need to Know: Inflation?, We're Rich!, And It's a Good Thing, Fed Says..., Department of Impossible to Make Up

What you need to know (and what it means)!

Stay Connected

Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Inflation?

See that "?"? We added a question mark after the word "inflation" to denote something that is "questionable."

The so-called core Personal Consumption Expenditures index (PCE), the Fed's preferred measure of inflation, came in at a paltry 0.1% for December, according to the Commerce Department.

The forecast for core PCE was for a rise of 0.2% following November's flat reading.

So where is the inflation?

Nowhere to be seen, at least according to the bond market which happily ignored the upside in GDPyesterday in favor of a focus on vanquished inflationary pressures.

Interestingly, the last time core PCE was this tame the market was fighting deflation.

2. We're Rich!

Disposable income increased by a whopping 0.5% in December, the Commerce Department reported this morning. And in a related story, nearly 250 million people were treated for injuries resulting from all that money burning a hole in their pockets.

Personal income rose by 0.5%, up from 0.3% in October and November.

Wages and salaries, increased by 0.6% in December.

Meanwhile, take a look at the year-on-year growth rate in wages and salaries hitting a six-month high at 6.4%.

So what should we do with all that money? Spend it!

Spending on durable goods, rose by 0.8% in December, after a 0.9% increase in November.

Spending on nondurables jumped by 1.6%, the fastest in a year.

Since August, however, spending on nondurables is up a mere 0.3%.

3.And It's a Good Thing

It's a good thing we're so rich (see Number Two, above) because otherwise we wouldn't have two nickels to rub together.

Personal Savings was a negative $116.6 billion in December, registering a third consecutive monthly decline.

If you'll pardon the bullish spin, 1933 was one of the best buying opportunities in stocks in nearly 100 years, except that people didn't have any money because there was a depression on.

4. Fed Says...

Yesterday, while the Fed left rates on hold as expected, the FOMC statement accompanying the decision included a number of important changes.

As we noted would probably happen in Five Things yesterday morning, the FOMC removed the word "mixed" with respect to the economy from the statement, opting for "Recent indicators have suggested somewhat firmer economic growth."

As expected too, the vote was unanimous with the replacement of The Dissenter, the Richmond Fed's Jeffrey Lacker, in the FOMC voting.

What was slightly unexpected was the note that "some tentative signs of stabilization have appeared in the housing market."

That's a bold & weird statement; bold if for no other reason than that it simply can't be substantiated by the facts, and weird if for no other reason than that it simply wasn't necessary to include the housing comment to make the case that economic activity has become somewhat firmer.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.